alt Hacker NewsSeems like you could get a very similar phenomenon in lavishly funded hot startups.
The company's stock is the product. The product only has to be good enough to look plausible. Growth can be bought by selling $1 bills for $1.50 and by plowing money into marketing. The most important thing is to keep the hype up and raise the next round and make sure it's not a down round, or even if it is who cares... the execs just pay themselves fat salaries or work side sales of stock into there to cash out even if the main stock price is underwater.
You get inherent problems when you're selling a promise or a certificate not a product.
Author here. Agreed that overfunding of any kind can break feedback loops. When you have more money than signal, narrative fills the gap.
The structural difference with tokens is liquidity and breadth of exposure. In a VC-funded startup, equity is illiquid and held by a small number of employees and investors with board seats. There's still a corrective mechanism, even if it's slow.
With a token, the instrument is liquid and held by thousands of retail participants with no effective governance rights. Everyone (treasury, employees, community) shares a direct financial interest in maintaining the story, and there's no board meeting where someone says "the numbers don't work."